While I don't consider myself a true mustachian, I suspect I'm much more frugal than most people. I have no debt whatsoever, and never have, therefore no credit. None. nada. zilch. I have a middle-class income (~$30,000/y take home). And I own a smallish motorcycle, which I currently ride everywhere for next to nothing and love every minute of. Sadly, temperatures are starting to drop, and once snow and ice collect on the roads I won't be able to safely commute to work. There's no public transit whatsoever to where I work, and it's much too far to walk (10 miles each way). I can walk everywhere else. Oh, and I'm 21y/o with crazy auto insurance premiums, so that's gonna hurt like a (*&(*(*&#$%$#%!!! Also, I'm not selling my bike. I'm putting probably 10-15,000 miles (travelling is a hobby) on my bike and less than 5,000 on the car annually (winter and occasional trips only). I have $2,000 in the bank saved for a car and the way I see it I have basically five options which I'll weigh in on my opinions as follows:
Borrow money and buy a barebones new or nearly new car for $10-15k and drive it into the ground.
PROs:
I can keep maintenance costs down in the long term by being vigilent about PM.
Initially no maintenance costs (under warranty)
I can travel without worrying about being stranded.
Not have to worry about another car for a *very* long time
CONs:
CAR PAYMENT!!!
HIGH INSURANCE!!!
HIGH INTEREST!!!
Hidden Fees
Other thoughts:
New, barebones, economy cars don't depreciate as much as it's made out to be, but still more than an old car.
I mostly avoid depreciation by holding onto it for the next 20+ years
Borrow money and buy a $4-8k car with ~50k miles
PROs
midrange between new car and beater, so decent maintenance costs, decent depreciation, and 5~10 year replacement cycle
CONs
PAYMENTS, INTEREST, INSURANCE!!!!!! (same as new car)
Questionable maintenance history!
Buy a $2000 beater
PROs
NO PAYMENTS!!!
LIABILITY INSURANCE!!!
CONs
FREQUENT VEHICLE REPLACEMENT!!! (the vehicles i've test driven felt like they were about to fall apart - all of them) (likely annual replacement!)
Literally everything else
Unreliable!
high maintenance cost!
crappy vehicle (smelly, no ac, broken gadgets, etc)
Option 4: Lease the new, barebones car, and buy it when the lease is up. Basically the same as option 1, but different method of financing.
Fifth option: Rent a car for the winter, take a cab, etc
PROs:
No bills
CONs:
!@(*#&&$*( EXPENSIVE!!!!!!!!!
Seems like there's no good way out of this situation.